In 2000, two of the hijackers in the September 11 attacks, Nawaf Alhazmi and Khalid Almihdhar, moved in with Shaikh in Lemon Grove, California.[4] However, Shaikh did not provide his FBI contact Steven Butler with any information about the two; Butler claims that the names Nawaf and Khalid were only mentioned in casual conversation as two students who had rented rooms from him, and that once Shaikh had cut a phone call short stating that "Khalid's in the room".

Butler later asked Shaikh for their surnames, but was not given them. He was not told they were pursuing flight training and that the students were non-political and have done nothing to arouse suspicion. The CIA had not provided names to the FBI which could have prevented 9-11.[5][unreliable source?]"They were nice, but not what you call extroverted people" Shaikh told The San Diego Union-Tribune after the attacks. Still, he told reporters he bonded with Alhazmi, helping him open a bank account and place a personal ad on the World Wide Web. "He told me that he wanted to marry a Mexican girl," Shaikh told the Los Angeles Times. "The problem was that he didn't know any Spanish. So I taught him a few Spanish phrases."

Shaikh sat on San Diego's Citizens Review Board on Police Practices (CRBPP) during the time frame of his co-operation with the FBI. Ethical questions arose about his qualifications for city employment, as active police informants are precluded from employment on police oversight committees for obvious reasons. Shaikh was later removed from the board.[8]